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Booth in Farmers Market or Flea Market - Tax Issues

Sales Taxes, Income Taxes, Self-employment Taxes

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If it sounds like fun to grow produce or make crafts and sell them at a local market, it's not quite that simple. Seasonal businesses like booths at flea markets, farmers markets, and craft fairs must also pay taxes. Although each locality and state has different regulations, if you have a business where you sell to customers, you probably are going to have to pay taxes.

Flea Market, Farmers Market, and Craft Sale Booths

If you have a booth at a flea market, farmers market or craft sale you are creating or growing something, and you expect to sell it for a profit. And profits are taxable. If you are selling at a flea market booth, for example, you may be selling collectibles you picked up at garage sales for a low price, and you want to sell for a higher price and make a profit (otherwise, why would you bother?). Those profits are taxable.

Licenses and Permits

Just like other local businesses, owners of booths at flea markets and farmer's markets must adhere to local licensing and permit regulations. This means getting a local business license from your city or county. It may also mean other special licenses and permits, like a health department permit if you are selling prepared food.

What Taxes Must a Seasonal Business Pay?

A seasonal business must pay, at minimum:

  • Income taxes on profits of the business, depending on your business type
  • Sales taxes on sales of taxable items
  • Self-employment taxes (social security and Medicare) for yourself as a business owner
  • Employment taxes, if you have employees

Income Taxes for Seasonal Businesses
Seasonal businesses like flea market or farmers market booth owners must pay income taxes just like other types of businesses. How your business pays income taxes depends on your business type. If you don't formally adopt another type of business structure, your business is classified as a sole proprietorship and the business taxes are paid through your personal income tax return. The income and expenses of your business are reported on Schedule C, then the net income or loss is carried over onto your Form 1040.

Being a business means you can collect those expenses for making your products and getting them to market to reduce your business income. If you don't file business taxes and claim these expenses as business deductions, they otherwise are not deductible to you on your income taxes.

Many localities charge other taxes, and your state may charge franchise taxes or other types of business taxes. As you start out, keep it simple, but do make sure you pay those taxes. Ask a CPA or tax advisor for help.

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